Articles
Newsletter
| Is Bankruptcy for You |
 |
 |
 |
| Written by William Blake |
| Saturday, 16 August 2008 15:05 |
|
For those who feel that they are in serious financial distress, bankruptcy may have crossed their minds. Bankruptcy is not something to be taken lightly. While your debt may be wiped clean, there are far-reaching consequences for that "new freedom". Most people who are considering filing for bankruptcy are doing so because their debt has become uncontrollable. Individuals who declare bankruptcy do so under Chapter 7 or Chapter 13. Chapter 7 bankruptcy completely liquidates debt and any assets related to it. Chapter 13 bankruptcy is different. Instead of liquidating debt it postpones your payments and helps you plan how to pay back part of what you owe. Bankruptcy damages a person's credit. A bankruptcy judgment stays on credit reports for as long as ten years. During that time, any credit that is applied for will disclose the bankruptcy to the creditor. If filing Chapter 13, you still have to pay back part of your debt and the judgment stays on your credit report for ten years. Some people have turned bankruptcy into a way to easily get rid of debt without having to pay the money they owe. In some cases, individuals have filed for Chapter 7 multiple times in an effort to rid themselves of incurred debt. Each state decides on what assets they will exempt from being seized during a bankruptcy hearing. Knowing that, some may use available cash to purchase those items (homes, cars, etc.) in an effort to avoid payment and still retain the stuff they purchased. In this instance, creditors receive little or nothing from the bankruptcy settlement. The new laws concerning bankruptcy have changed this. Whereas courts used to have the leeway of deciding who could file for Chapter 7 bankruptcy, there are now criteria that must be met first. In order to file for Chapter 7 bankruptcy, a person has to have an income that is below the median income for the state where they live. Their income must be put through a calculation that determines if they have enough disposable income to pay twenty-five percent of their outstanding debt. These changes have made it so that more people file for Chapter 13 bankruptcy. In these proceedings, the court take into consideration a person's financial situation and their debt in order to determine how much money they are realistically able to pay. Necessities like a rent or mortgage payment and utility bills are calculated and compared to standards that the IRS has set for Chapter 13 bankruptcy filers. After this, the actual amount to be paid is determined and the rest is considered exempt. Now that the bankruptcy process has become more complicated than before, lawyers are charging more to handle the proceedings involved. The extra cost involved also makes people think about their situation seriously before filing. Credit counselors can help you to make a plan for getting rid of debt without going through the bankruptcy process. Bankruptcy should always be a last resort. While it will give you a clean slate, it comes at a price. About the Author: Do you budget for your spending every month? If not, that could be why you're dealing with all that credit card debt. Learn how to reduce your debt faster and with less interest paid on the Debtopedia website. Get a free copy of my report "Secrets of Credit Card Debt" at http://www.debtopedia.com Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
| Last Updated on Wednesday, 27 August 2008 15:35 |
Stumble It!
Members : 1254
Content : 2297
Web Links : 1
Content View Hits : 309420
Content : 2297
Web Links : 1
Content View Hits : 309420